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The National Development and Reform Commission (国家发展和改革委员会) recently decided to increase gasoline and diesel sales prices by 350 Yuan. The new prices took effect at midnight local time (16:00 hours Greenwich Mean Time on Saturday), according to China News Net / chinanews.com (via Enorth, Tianjin). The increase is in line with market expectations, but smaller than the gains in crude costs, reports Reuters:

“Experiences in recent years have told us that by suppressing prices it would discourage refiners to produce or import and lead to shortages and queuing at petrol stations,” NDRC said.

The agency said the price move has been delayed and that the increases fell short of the rises in global crude prices to which Chinese fuel prices have been linked since Jan 2009, due to rising inflation concerns.

Letting the prices rise is based on the commission’s intention to let market forces, i. e. supply and demand, determine the allocation of resources, writes China News Net. Oil consumption had continuously and rapidly risen along with China’s steadily rapid development of recent years (近年来，随着我国经济平稳较快发展，石油消费持续快速增长), the author of the China News Net article quotes a comrade in charge at the Development and Reform Commission. The unnamed comrade explains:

Let’s take the automotive industry as an example. In 2010, the number of cars sold in our country exceeded 18 million, an increase of 32 per cent1). When we calculate the quantity of fuel consumed per car as 1.5 tons, this spells an increase of 27 million tons in demand for refined oil [i. e. gasoline or diesel fuel, basically – JR], and therefore a demand for about 45 million tons of crude oil. Domestic crude oil production within China has continuously been at 190 to 200 million tons, and every added ton in demand had to be imported. In 2010, China imported 239 million tons of crude oil, an increase of 17 per cent. Dependence on foreign oil therefore increased by three percentage points, to more than 55 per cent. This has made China the second-largest importer and consumer of oil, and the security background to those oil supplies can’t be viewed optimistically. Besides, the excessively rising oil consumption exceeds what our country’s economy, resources, and environment can bear. Therefore, price adjustments need to be the levers to take a guiding role in containing excessively rising oil comsumption and to encourage save resources.

Secondly, the commission official points out, the current situation made China too dependent on price developments on the international oil market. Adjusting the prices now would therefore help to protect market supply, avoiding negative shortage effects on production and import dynamics, the phenomenon of queues at gasoline stations, and social operational costs2) (社会运行成本). However, to keep the impact of the price adjustments small, the state had also increased regulation of refined oil prices. The adjustment had come with some delay to the actual market trends, taking the spring festival season into account, even as international prices had kept rising after the most recent adjustment on December 22 last year.

The problems the adjustment constituted for disadvantaged groups was also taken into account, according to the official. Grain farmers and companies whose production was for the common good would be subsidized, as had been the case in the past. Fishery, forestry, urban public transport, rural passenger traffic would be subsidized, and temporarily, there would be subsidies for cab drivers, too. “Unreasonable” price increases in fares and transport fees would be monitored and prevented. The general development of prices, resulting from industrial dependence on fuel, would also be kept stable. National refineries were expected to strictly implement the national pricing policies, and authorities on all levels would intensify price supervision.

Farming today: too subsidized to be concerned?

Delaying the price adjustments until after the spring festival season surely was considerate. But given that administrative price controls notwithstanding, the hike in gasoline prices will drive inflation further, the move can also be explained with the government’s desire to keep inflation low during January. Stock markets had been nervous about the January inflation numbers, and there are strong indications that January inflation would have exceeded five per cent anyway, hadn’t the National Bureau of Statistics based its computations on adjusted weightings in the basket of goods.

Somehow, the Chinese authorities will be successful – even if only on paper.
____________

Note

1) According to statistics cited by Southern Metropolis Daily on May 1 last year, the number of car ownerships in China had reached 76,190,000 in 2009. Production and sales that year exceeded 13.6 million. The production and sales of passenger cars also exceeded ten million for the first time in 2009, making China the world’s biggest country in terms of car production and consumption.

2) If I’m getting these definitions right, China usually refers to costs of education, public security etc. as social operational costs. The usual international term should then be public operational costs.

Q (Name inaudible) — with China Press. I have two questions regarding U.S.-China and Japan relations.

MR. MORRELL: Okay.

Q The first one, it was reported by the Japanese Sankei Shimbun newspaper that the United States and Japan are slated to hold a joint military exercise in November as a mock operation to retake Diaoyutai Islands of China occupies them.

MR. MORRELL: Yeah.

Q Can you — could you confirm this report? If it’s true, what would be the purpose of this operation?

[…]

MR. MORRELL: The first question was about this exercise — the U.S.-Japanese military exercise — and I think you tried to connect it to the island dispute. Absolutely no connection. It’s a long-planned exercise not relating to any current events. This is merely about keeping up our operational — our ability to operate well together. And long-planned, not related to the island dispute at all.

Q So you mean the newspaper connect the two things together, right?

MR. MORRELL: I’m sorry?

Q The newspaper connect the exercise with the — (inaudible).

MR. MORRELL: They did that? Newspapers. I can’t believe that. (Chuckles.)
Yes, oftentimes things that are unrelated are connected in news stories. And that’s part of why I have a job, to push back on such things.

Huanqiu reporter Dong Wei reports that, according to Japan’s newsagency Kyodo of October 6, American department of defense spokesman Morell said on October 5 that the governments of Japan and the US plan an “island defense exercise” between the US forces and Japan’s self-defense forces. The American side said that the exercise was “not related” to the Sino-Japanese collision incident.

However, as sources on Japanese-US relations revealed, the military exercise of the two countries is based on the hypothesis that Japanese islands were “suffering an armed attack”. It is reported that Japan’s self-defense forces will dispatch aircraft, including F-15 fighter jets and cargo aircrafts to take part in this exercise, and that 250 paratroopers will be transferred from nearby Okinawa military base. The US Seventh Fleet will also join the exercise. Some of the exercise project will be public. Morrell said: “The exercise is being planned, and is not related to this incident” (莫雷尔称：“演习早就在计划之中，与‘此次发生的事件’无关). Kyodo’s report says that because of the hard-line attitude China displayed on the question of sovereignty over the Diaoyu Islands, the Japanese-US exercises could have “the effect of highlightening Japanese-US cooperation”.

Huanqiu Shibao, October 6, 2010

————

The first two paragraphs of Kyodo’s report – the one Huanqiu Shibao reporter Dong Wei[update/correction: Zhong Wei (仲伟)] apparently refers to -, have about the same wording as Dong’s own, but without the word “However” at the beginning of the second paragraph.

There were guesses, Liu writes, that although neither the Chinese nor the Japanese military really wanted to resort to armed force, if Japan really wanted to link the Self-Defense Forces to the Senkaku Islands (如果日本硬要把自卫队与钓鱼岛扯上关系), could it be that Japan hadn’t thought well enough about the chain reaction this could lead to (日本难道没有想过会产生更大的连锁反应吗)? As much as the incident appeared to be accidental, it had in fact been inevitable, writes Liu. It had been the result of long-term unbalanced Sino-Japanese relations. Japan had seen China’s, the great-power’s, mentality clearly (日本看透中国的大国心态) – attaching importance to friendship, not to hurt feelings, the mentality of face and giving face, and Japan was only waiting for an opportunity to poke China, just to tell its citizens then: “Look, China is that easily agitated, not like a great country.” Then Japan would retreat one step without benefit, leaving China’s power mentality satisfied, just to – maybe, who knows – bide another chance (伺机 sìjī – to wait for an opportunity).

The Japanese prosecutors had come to the conclusion that further detaining the trawler’s captain wasn’t worth it, given the worsening of Japanese-Chinese relations. However, writes Liu, while on surface, Japan had left the impression of admitting defeat (服软 fúruǎn), its step actually showed Japan’s particular cultural flexibility:

Just think of Emperor Hirohitho who didn’t hesitate to stoop to paying respect to allied forces’ commander General McArthur every day, in order to obtain the preservation of the Japanese state.
试想一下，战败后的日本昭和天皇为了达到保存日本国体，一段时间里不惜屈尊每日前往盟军统帅部麦克阿瑟住处前朝拜。

According to Liu, the Japanese peoples’ view on the Senkaku issue is one-sided. Besides,

[t]hey also mistakenly believe that the Chinese side (mainland China and Taiwan) only began to claim sovereignty again in the early 1970s because they knew that there could be oil and gas resources under the seabed. Therefore, the best thing to do would be to permanently station troops on the Diaoyu Islands, to completely finish the Chinese peoples’ hope to enter them. Such a misconception can lead to the issue becoming a problem that would defy solution. If this continues for the long term, the platform for any mutual understanding or communication will most likely be lost.
他们还错误地认为，中方（含大陆和台湾）是上世纪70年代前后因为知道此海域海底有油气资源才又提出主权要求。所以最好是在钓鱼岛常设驻军才能彻底断了中国民间的登岛愿望。在这种错误认知下，钓鱼岛问题很容易成为中日关系中的一个死结。长期这样下去，连相互理解与沟通的平台都将丧失殆尽。

Japan needed to show or develop a basic perception for international risks, writes Liu, but China also needed to take precautions (未雨绸缪 wèi yǔ chóu móu ). The Chinese foreign ministry had often hard [literally: to talk over cups of wine – 折冲樽俎 zhé chōng zūn zǔ] to achieve balanced relations with Japan, to achieve a peaceful neighborhood. China should work for friendly relations with Japan in general, while still clearly communicating its positions to Japan, dealing with the Senkaku issue in a project-oriented manner. Through all diplomatic means and nongovernmental channels (通过所有外交手段和民间管道), the Japanese people could be informed about the truth behind the Senkaku issue, achieving more clarity through talks (通过所有外交手段和民间管道，让日本国民知道中日间有钓鱼岛争执及其事实真相，与对方把话说清楚).

China had always been on the right side, and Japan on the other hand, in manipulative ways, had strenthened its position all the same [or gained the higher ground all the same – 琢磨及积极操弄，一直在加强实际控制], writes Liu. This situation had to change. Through consultation and discussions [this is how I understand the last paragraph – JR], China and Japan could avoid the worst possible outcome.

Repeated Chinese navy helicopter flights close to Japan’s Self-Defense Force ships in the East China Sea and the Western Pacific in April were neither professional nor responsible, Japan’s daily Asahi Shimbunquoted the commander of the U.S. Pacific Fleet, Admiral Patrick Walsh, on Tuesday. Walsh said that China had recently started referring to the South China Sea as its “core interest”, a term it otherwise uses to explain its positions on Tibet and Taiwan. Several states in the region, including Singapore and Vietnam, were now purchasing submarines “as a way of protecting sovereign rights”.

According to Walsh, China detained 433 Vietnamese fishermen in 2009 alone who were working in waters where the territorial claims of the two countries overlap. Walsh has visited several South China littoral states since assuming his position as US Pacific commander last year, among them Vietnam, Singapore, Malaysia, and Indonesia.

“These are countries that are interested in a closer relationship with our navy, and I intend to follow up on it”, Asahi Shimbun quotes Walsh.

Japan itself is concerned about Chinese naval traffic. In April this year, two Japanese naval vessels, the Choukai and Suzunami, unexpectedly encountered several Chinese People’s Liberation Army Navy (PLAN) warships, including a pair of submarines and eight destroyers, approximately 140 kilometers west-southwest of Okinawa near the Nansei (Ryukyu) Islands. Reacting to international coverage, Chinese defense ministry spokesman Huang Leiping (黄雪平), also in April, that naval exercises in international waters were common practice, and the countries concerned shouldn’t make arbitrary assumptions (主观臆断) and improper speculations (妄加猜测). To organize exercises in international waters corresponded with international law and was conducted by various other countries, too.

the safeguarding of China’s sovereignty and territorial integrity, and

continued stable economic growth and social development.

China increased its arms spending by 10% to an estimated USD 83.9 billion in 2008 as Beijing commenced building of new range of highly sophisticated nuclear submarines, stealth warships, new generation of fighter planes and weaponry to fight “Informationalized warfare”. In its 2010 yearbook, the Stockholm International Peace Research Institute (SIPRI) wrote that China accounted for most of the Asian and East Asian military spending increases in 2009, with an increase of 15 per cent, and that Taiwan and Singapore showed the largest real increase*) in military spending were at 19 per cent each. Also from SIPRI data, America spent 661 bn US-dollars (4.3 per cent of 2008 GDP) on defense in 2009, while China spent an estimated 100 bn (estd. 2.0 per cent of its 2008 GDP), with France, the UK, Russia, Japan, and Germany following.

“The author’s [i. e. Zhao Nianyu’s — JR] observation of America’s attitude concerning Taiwan hasn’t lasted for a mere one or for two years only. He has read all the documents issued since the establishment of diplomatic relations between China and America, has read America’s Congressional Research Department’s ninety documents about cross-strait relations, he has heard previous American leaders’ speeches on the Taiwan problem and every mainstream American think tank’s speech, article, or report on the Taiwan problem, and to put it in an immodest way, he can sum them up in eight characters: they wield their power rather capriciously [翻手为云，覆手为雨, literally: to produce clouds with one turn of the hand, and rain with another turn]. From one wing of the building, an American leader says “One China”, from the other wing, Congress starts saying that ‘Taiwan is a territory without a master’. This wing just agreed to the Three Communiques, that wing says that according to the so-called ‘Taiwan Relations Act’, there was an ‘obligation’ to safeguard Taiwan’s security. This wing just said it would ‘respect China’s core interests’, the other immediately refers to ‘China’s state of mind’ and says that ‘there is no reason to believe that only China has core interests concerning the Taiwan question’. To put it bluntly, when will America’s core interests reach the gates of China, half-a-globespan away from America? The author believes that contradicting themselves on the Taiwan question is a big American characteristic, and there is no need to use ‘separation of powers’ or ‘freedom of speech’ as an excuse here. A big country, and particularly the world’s unique superpower, can’t use any pretext to interfere with another country’s sovereignty and territorial integrity when ‘going back on its own words’. America’s government’s position on the Taiwan issue must be unequivocal, clear, and consistent. If they can’t abstain from going back on their own words, this will have an absolutely negative effect on America’s credibility as a responsible big country.“

Zhao’s second commandment refers to American arms sales to Taiwan (a pledge to phase out the arms sales), his third one to “word games” – alleging that the American power monopoly or hegemony goes as far as to give an additional meaning to originally unequivocal, innocent phrase – a language trap (语言陷阱, yǔyán xiànjǐng) created by America for use on the Taiwan issue. ***)

Valérie Niquet of IFRI, in October 2007, suggested that the security of SLOC (Sea Lanes of Communications) was closely linked to China’s core interest in Taiwan:

For China the security of SLOC regarding oil supply is rather specific.The issue does not concern the risk of terrorist attacks; Chinese analysts tend to speak of the Malacca dilemma in order to express their own preoccupations with the security of sea lanes. According to Chinese strategists, the main threat of disruption comes from the US and its allies, in the Indian Ocean and along the SLOC in South East and East Asia because of a potential war with Taiwan. One of China’s priorities is to reduce at least part of China’s dependency on SLOC for oil and energy supply and develop land routes and pipelines. For the time being, China’s dependency on SLOC for oil is over 90 %. ****)

Ralf Emmers, in a paper for Nanyang University’s S. Rajaratnam School of International Studies (RSIS) of September 2009, notes a growing asymmetry of naval power to the advantage of China in the South China Sea. Besides the opportunities to extract resources from the waters around the Spratley and Paracel Islands, they are also at the center of strategic considerations. If it “ever succeeds in realizing its territorial claims, China will be able to extend its jurisdiction to the heart of Southeast Asia. And besides, Emmers argues, Beijing was aiming at a strategy of sea denial meant at keeping US forces temporarily out of a limited naval zone from where they could support Taiwan *****).

In a reaction to Emmers’ paper, an article by Wang Nannan (王楠楠), apparently a military affairs reporter, first published by Eastday (东方网, Shanghai) and republished by Xinhua Net on October 27,. 2009, noted that Emmers’ “report” pointed out that obviously, China’s military buildup in the South China Sea wasn’t only to be used for avoiding, or by use of armed force (if necessary) eliminate any violation of any territory of which its sovereignty was disputed, but also China’s security at sea, its economic prosperity, and its energy supplies, which required safeguarding the South East Asian shipping lanes – the Strait of Malacca, the Singapore Strait, the Sunda Strait, and the Lombok Strait. The Eastday article also reproduces Emmers’ argument about a strategy of sea denial to keep US forces away from Taiwan in case of conflict. It attaches particular importance to this paragraph:

The only power capable of countering the Chinese military would be the United States, particularly through its Seventh Fleet. Yet, Washington has repeatedly stated that the Philippine claimed territories were not covered by the Mutual Defence Treaty of 30 August 1951, which ties the Philippines to the United States. (…) Though following closely the developments in the South China Sea, the United States has consistently limited its interest to the preservation of the freedom of navigation and the mobility of its Seventh Fleet. It is therefore unclear how far the United States would go to support either Taiwan or the Philippines should conflict occur in the South China Sea. *******)

Admiral Walsh’s remarks of this week (see above) could mark a shift in Washington’s policies on the South China Sea – but how exactly Walsh is going to follow up on Vietnam’s, Singapore’s, Malaysia’s, Indonesia’s and other South China littoral states’ apparent interest in closer cooperation with the US Navy remains to be seen.

____________

*) Real increase / decrease usually includes a calculation of general decrease in the value of the amount in question — JR

***) This third paragraph looks interestingly paranoid to me – but it is also the one I find rather difficult to translate. Here is the Chinese text:“三戒“文字游戏”。笔者精通英语，更精通美国从政府到国会乃至到各大智库所出台的有关台湾的文件和报告，一个总体的感觉就是美国的霸权不但是政治经济军事等方面的，即使在语言表示和语言转换方面，美国通过“文字游戏”手法同样充分表达了自己的话语垄断权和霸权，且不说当年的“承认”和“认识到”的翻译问题，也不说“不支持台独”不等于“反对台独”的强词夺理，就拿最近两年的表述来说，什么“只管过程，不管结果”，什么“承认中国对台湾的主权”的说法在不同的地方有不同的解读，什么在台湾问题上“不采取立场”等等，恕笔者直言，这些全是“文字游戏”，也可以说是美国在台湾问题上制造的“语言陷阱”。长期以来，美国在文字上玩弄的花样够多的了，笔者曾从语言的角度对美国的文字游戏做过小结，此处无须赘言。“

“One World” – instead of “first, second, and third world” – used to be an unalienable piece of vocabulary in every do-gooder’s wordpool, at least from Western countries. German weekly Die Zeit, not really a bunch of treehuggers, but a paper usually giving responsible opinion and unhurried advice, is re-assessing the one-world concept in an online article. Yes, in London and Pittsburgh, the governments of the world did write new rules for the financial markets. In Geneva, they held another round of negotiations about a new trade system. They will be back in Davos again soon, to perambulate all the global problems in their totality. They tried to save global climate in Copenhagen. But they are forgetting the financial crisis, the further we seem to leave it behind us. The more remote the memory, the smaller chances are to write global rules that would be globally effective.

And they failed in Copenhagen – “Every country has its own dirty taboo”. Bill Clinton, Tony Blair, and Gerhard Schröder liked the idea of global governance, writes Die Zeit. In the end, they hoped, negotiated agreements and international organizations – NGO’s and corporations included – would lead to some kind of substitute for a desirable, but still unachievable global government. Liberals and left-leaning people in general seemed to support the concept.

But global emergency management has proved to be the maximum of what global governance could achieve together. There is no common concept of tomorrow’s world, writes Die Zeit. Both Europeans and Asians had gained a new self-confidence vis-à-vis America. Europe’s economic and social systems had shown a remarkable resistance against the effects of the economic crisis, and India and China put economic development before climate protection. “In India, you can’t see the climate problem eye-to-eye with Europe or the USA”, the paper quotes Shyam Saran, an advisor to India’s prime minister Manmohan Singh. On a global scale, Europe’s concept of political integration appears to be a rather singular one.

Die Zeit lists liberals and left-leaning people who actually start to like the idea of such a world – and of nationalists who had always been skeptical of any kind of global governance anyway.

The article’s author actually confuses China’s party and state chairman Hu Jintao with the country’s chief councillor Wen Jiabao. And in other ways, the author also still seems to underestimate the distance between East (arguably excluding several countries such as India, Vietnam, and possibly Japan and South Korea) on the one hand, and Western countries on the other. There isn’t really much reason to believe that a common view of the world will emerge any time soon. Jonathan Spence, in a Reith Lecture in Liverpool, broadcast by the BBC on June 10th 2009 June 10th 2008, suggested that the issue of the Opium Wars

You can be pretty sure that China’s government does want to keep the old pain alive. “To remember the bitter past to cherish the happy present tense” is a tradition that either came into being or was revived by the CCP during the Chinese Communists’ early days in power – and it is still an efficient way to keep the Chinese public sufficiently afraid or distrustful of foreigners to disapprove of “foreign concepts”. Even otherwise highly open-minded Chinese people often cling to these “open accounts from history”.

At hindsight, at the end of the 20th century or at the end of the 21rst century’s first decade, one may probably say that it was naive to believe that world governance could be an option. You can’t do business with a totalitarian regime, unless you are ready to do business at its terms.

The Zeit article, as flawed as I believe it to be in one or another detail, caught me by surprise. I’m left-leaning myself, and until today, I have felt that my re-orientation towards regional solutions, rather than global ones, was something not too many others of my political color would share. But there seems to be a general trend towards regional action. Elinor Ostrom, an American economist, argues that people may actually commit to the common, rather than the individual use of resources, so long as they succeed in organizing the use and maintenance of such resources. A single system of rules for rather large international fishing zones was likely to fail, she suggests. Polycentric solutions – or regional ones – might work. Experimenting with different ideas in different places could amount to a competition of different ideas., which would either convince bystanders, or leave them unenthused.

China is going to lower import customs duties on some 600 products next year, as agreed with the WTO, reports Liechtenstein‘s Volksblatt, among them naphta and coal. Currently reduced rates on gasoline and diesel, and windmill components will go back up, thus leaving public revenue basically unchanged. After completion of a number of new refineries, China is now probably a net exporter of gasoline and diesel. Export duties on natural resources such as crude oil, cellulose, ferrous alloys and some steel products, so far said to be temporary, are to remain in effect.

Niebel’s suggestion is probably not meant to be mere populism, or Liberal Democrat “hostility towards China” – after all, India too, is on his list of countries which do no longer fulfill the criteria for development aid in Niebel’s book. Henrik Bork, (formerly a correspondent in China, and expelled / not re-accredited by the Chinese authorities in 1995) points out in an article for the Süddeutsche Zeitung that China itself grants development aid to Africa and Central Asia, often of little benefit for the people there, and rather in order to secure itself political influence.

Cars made in China may go almost unnoticed in most of Europe (and North America, I guess), but you do see a lot of them in Syria, which was among the four countries visited by Wu Sike (吴思科), China’s special representative for the Middle East, late in July and earlier this month. In 2006, the major export markets for the Chinese car industry were Russia, Iran, Belgium, Syria, Algeria, Kazakhstan, Angola, Vietnam, Ukraine, and Iraq (the countries written in bold letters are among the four visited by special representative Wu). The 2006 numbers in detail, according to wtojob.com, were as follows:

Rank

Country

Vehicles

in 1,000 USD

1.

Russia

38,051

350,030

2.

Iran

10,606

237,710

3.

Belgium

18,147

197,730

4.

Syria

51,662

191,560

5.

Algeria

20,201

156,950

6.

Kazakhstan

5,703

135,520

7.

Angola

6,966

131,540

8.

Vietnam

14,491

99,650

9.

Ukraine

10,119

82,800

10.

Iraq

13,618

77,920

The average price paid per car varies strongly from country to country.

According to the same source, exports to Syria showed a small decline in 2007, while exports to Russia rose to 106,000 vehicles – that would be 17.3 per cent of China’s total automobile exports. Major markets in 2007, besides Russia, were Syria, Ukraine, South Africa, Algeria, Vietnam, Iran, and Venezuela.

Exports to Russia went down in 2008, with only 77,000 vehicles. Especially in the fourth quarter, there were hardly any exports to Russia. Exports to Africa, Latin America and ASEAN countries kept rising, but the trend in Russian exports is pointing downward this year, too.